Thousands lose out as tax crack-down by HMRC leaves long rebate delays

A security crackdown has left thousands of taxpayers out of pocket waiting for refunds from HM Revenue & Customs.

The battle to combat fraudsters and criminals trying to rip off the tax office has led to many cases being held up in the system — infuriating taxpayers and accountants. As a result, HMRC has been forced to rethink its security measures several times.

The knock-on effect is that people who have dealt with the same tax office for years are being asked repeatedly for new personal details before they can get a refund.

Patrick McSorley is owed more than £3,000 in tax by HMRC

This extra red tape has led to delays which have been compounded by the bungle over tax codes made by HMRC earlier this year. Thousands of incorrect codes were sent out when a number of tax computer systems were merged into one. You can see more on this story at www.thisismoney.co.uk/taxchaos

A recent report by the National Audit Office estimated that about £3 billion is being held up. It claims delays have led to 18 million unresolved tax records — belonging to 15.4 million people.

In these cases some nine million waiting to discover if they have been over¬charged or undercharged.

Money Mail has seen cases where taxpayers have been waiting three years for refunds. One reader told us how his 70-year-old wife had been waiting for over¬paid tax dating back five years.

He said: ‘She has telephoned them and been fobbed off. She has written and been fobbed off. She has supplied all the information they have asked for, none of which seems to have anything to do with her getting her money. We don’t know what more we need to do.’

At the heart of the repayments problems is believed to be the constant battle against criminals.

In the past year about £2.7 billion was paid out in error or because of fraud. HMRC is desperate to crack down on these losses and, as a result, is constantly upgrading its security process to ensure legitimate repayments are made to the right person. This leads to taxpayers being asked for more personal details.

The system can be particularly frustrating for people who struggle to get through to their local tax office to find out what has happened to a refund.

But even accountants are struggling. They claim that it is only when they ring to find out what has happened to a rebate that they discover there is a problem.And they have been critical of the level of expertise of HMRC staff, saying that frequently they have to explain the rules to tax staff.

Tina Riches, a director at the Chartered Institute of Taxation, says: ‘If only HMRC were a little better at balancing expectations. If they just told accountants that there were delays and refunds would not be processed for two months then they could deal with that. But there is no communication and it just makes the situation worse.’

Tim Fitzgerald from accountants HWFisher, says: ‘The level of expertise from some of the HMRC staff is very poor. You end up having to explain to them why something should happen. It’s frustrating for us and it’s even more frustrating for clients.

'You have to explain to them that you really don’t know why their refund is not forthcoming.’

A spokesman for HMRC says: ‘We aim to deal with claims for repayments as quickly as possible. In practice, though, it is not always possible to prioritise repayments.

‘There are criminals out there who are trying to defraud the system and take money from UK plc. We have to stop them and that is why we have to constantly review our security measures.

‘We can’t tell people what these are because that would only help these criminals.’

'I'm still owed £3,000'

Patrick McSorley is owed more than £3,000 in tax from an overpayment he made in 2007/2008.

He has been chasing the tax office for more than two years to get a refund, but has not been successful.

Mr McSorley, 57, who lives in Inverness with his wife Naomi, 48 (both pictured), used to run a cafe. He was forced to close it after suffering from ill health, and ended up paying more in tax.

His accountant tried to reclaim this, but HMRCRC would not respond. Yet it has managed to pester him for £600 this year that it believes he owes them.

‘They have the nerve to charge me interest on it, when they have still got money they owe me,’ says Mr McSorley. ‘Every time we speak to them, someone else is dealing with it. I’m not going to pay them until they pay me.’

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Thousands lose out as tax crack-down by HMRC leaves long rebate delays